2002 Volume 5 Issue 4

Conversation with Kinko’s Paul Orfalea

Conversation with Kinko’s Paul Orfalea

Visionary founder of Kinko

Paul Orfalea, the founder and guiding presence at Kinko’s until fairly recently, is the interviewee for this issue of the Graziadio Business Review. However, to call this an “interview” may be a misnomer. It was more of a wide-ranging conversation, darting off in a variety of directions, than a traditional “question and answer” interview. That is probably appropriate, as Orfalea is not overly-impressed with type-A, linear-thinking people who do everything “by the book” and in a driven fashion. Whatever it may be called, however, it provided some interesting insights into the thinking of one who is, without question, a very creative entrepreneur.

While still in college, Orfalea opened his first photocopy store in a garage on the main road of the campus at the University of California at Santa Barbara. That was 1970. In addition to photocopies, he sold pens, pencils, tablets and other study-related items that students needed. He even had his salespeople go into the dorms to sell notebooks and pens. By the mid-70s there were numerous Kinko’s located across the street from college or university campuses as well as some stores that were designed to serve business customers who did not have photocopying services in-house. At the campus-based stores, faculty, as well as students, were regular customers. In time, the faculty practice of having Kinko’s make and sell copies of articles they wanted their students to read led to a lawsuit by several academic publishers.[1] While Kinko’s argued that the practice was covered by the fair use doctrine, the court disagreed, and a major source of revenue disappeared. Orfalea, however, did not look back. Instead, he changed the business model to emphasize the stores that served business customers. Almost everyone in America now knows how successful that strategy has been.

A major factor influencing how Orfalea has approached business has been the fact that he is dyslexic. (A more in-depth account of how this has impacted his life can be found in his first person account at Learning Disabilities Online.) Having difficulty with books, Orfalea focused on people. That becomes very clear in his comments below.

Since selling his stake in Kinko’s, Orfalea has concentrated on spending time with his family and on his family foundation. He is certainly not retired however. He enjoys talking with college students, particularly undergraduates, and investigating new opportunities and adventures, including an investment in bowling.

Following are some excerpts from Paul Orfalea’s conversation with Professor David Smith and Associate Editor, Frieda Gehlen. With apologies to Mr. Orfalea, we have made the format reasonably linear to fit our needs here. But we acknowledge that the reader would have a better sense of who Paul Orfalea is had he or she been present in the room.

Paul Orfalea
Paul Orfalea

GBR: How is the fact that you have dyslexia influenced your management philosophy?

Orfalea: I’m lucky, I can’t read well, and I’m not mechanically inclined. So I know anybody else could do any particular task better than I can. So, the people in the front lines are my customers. I need to keep them happy. And, the best way to take care of your customers is to take care of your workers. The people in the middle are my employees, and if they’re not aligned to those customers, then it is my job to make them aligned. A lot of times middle managers take their eyes off the ball, which is to take care of their customers and workers.

As a manager or owner, it is your job to understand where you are headed, to motivate your workers, and to balance your checkbook. It’s really simple. And business has a great way of screwing that up.

GBR: How much does a manager need to know, technically, about what needs to be done?

Orfalea: I can’t answer what every manager needs to know. But I’ll tell you what my biggest challenge at Kinko’s was. When we had two and three workers in the store, the manager knew everything about everything. Now you have 40 or 50 workers. Now you want the manager to know about people, not about things. So, as an organization evolves and grows, managers need to have good people skills more than good technical skills.

GBR: How do you learn those?

Orfalea: I think there are two kinds of people, and I think that you’ve got to be true to yourself. You need to decide if you feel more comfortable working with tasks, and being self-fulfilled that way, or if you like the idea of working with people. If you want to work with people, it’s going to be frustrating sometimes. It’s an art to deal with people, where working with “things” can be a science. When you move into management, I think you’ve got to evolve from science to art. And to say that there’s no art in business is absolutely ludicrous. To motivate people is art, not science.

GBR: At one point you said that it is the role of management to remove obstacles for workers. What do you mean by that?

Orfalea: When you are dealing with employees, you are dealing with a total person — the whole enchilada of the worker. A worker might have a problem with her husband, but you’ve still got to get a smile on her face. That’s your problem. When workers have mood problems because they’ve got baggage, that’s your problem. So I think you have to be concerned with all the obstacles, to make sure they are very alert and happy. You can’t separate their home life and their personal needs from their work. If they’re having a hard time catching the bus, getting to work, I guarantee you you’re going to have real motivation problems.

GBR: So, if someone’s having a hard time with the bus schedule, that becomes your worry?

Orfalea: You need to first understand what their needs are. You have to empathize and understand what their problems are. You might not be able to solve everybody’s problems, but you have to at least be able to understand them. My favorite question at Kinko’s was, “What can we do to make you happy?” That didn’t apply just to business. It was, “What we can do to make you happier in any area?” I believe to be happy in life you have to have three things in balance: work, love and play, and that was incorporated in our values statement at Kinko’s.

GBR: So if someone’s having trouble because her childcare person didn’t arrive, and therefore she couldn’t get into the store, this becomes your problem, not just hers?

Orfalea: Yeah. You’re responsible for the whole organization aren’t you?

GBR: How do you, as a manager, deal with it if it’s chronic?

Orfalea: Usually if it’s chronic in that area, there are other chronic problems too. But if it’s occasional, that’s ok. People who are habitually late have probably got problems in other areas. They’re sloppy, come in to work late, are untidy. . . . I would say that that’s just a symptom.

GBR: Are there good corporate policies to achieve work/life balance.

Orfalea: Actually I don’t believe much in corporate policies. You hire managers to make decisions. You hired these people, emancipate them. Don’t over-manage people.

There are some kinds of policies that are important though. When I ran Kinko’s, my charity work was the workers. I battled very hard for daycare, orthodontics coverage for our company. I battled pretty hard for twelve weeks off for our workers after pregnancy, childcare leave. I didn’t win that one before I left. I always believe that a corporation’s first responsibility is to its workers. We have so many people struggling in life, and for us to give money to the opera, while these single mothers have everyday battles, seemed very inconsistent to me.

It’s all about the sparkle in their eyes. If you’ve got the sparkle, you can take them anywhere.

GBR: Does that go back to how you hire? Do you look for people who have that sparkle to start with?

Orfalea: Hiring’s a gamble. A shoot of the dice. You manage a culture, an environment. You don’t manage the individual. The bad people always work themselves out. You hire people, then trust them. Give them all the latitude they need. The best governments govern least; the best managers manage least. Remember, it needs to be a fun place to work. Give your employees a sense of purpose.

GBR: I’d like to go back to the idea of removing the obstacles to try to help employees . . .

Orfalea: I reflect back on my career at Kinko’s. We’d make sure the worker was there at 8:00. That’s stupid. Why don’t you just say, “Here’s a basket of work you have to do, like pay the bills. Here are the bills you have to pay. If you do it all in ten days of the month, I don’t care; go home.” I didn’t do that then, but I think there are a lot of tasks in a business that can allow a lot more flexibility. As long as you get the work done, who cares.

GBR: Do you think it’s a role for a manager to say, “You’re working too hard.”

Orfalea: Oh yeah. I get that all the time…I had a real problem with people overworking actually. They’d work sixty to seventy hours a week in the stores, and they were busy, busy, busy, but the store was dirty and they didn’t see it.. I’d say, “Why don’t you get the windows cleaned,” and they would say, “I’m too busy.” Busy is not a good word, I think. It’s not a good excuse. Come on, it’s common sense. Get it done; delegate it. I never aimed for busy-ness at Kinko’s. How could a manager working 12 hours a day have work, love, and play in balance?

GBR: How does all of this figure into the bottom line?

Orfalea: You’ve still got to go to your economic principles. If you have a high fixed cost – low variable cost business, your marginal costs are next to nothing. Then these principles apply. In my business the variable cost was 20%, so those policies work. Every marginal dollar I made went 80% to the bottom line. If I had a high variable cost business, like a car dealership, things like flex time might not work so well.

GBR: On a completely different topic, how do you deal with a situation where your business plan is blown up, as happened to you when the Supreme Court decision came down against Kinko’s?

Orfalea: It comes back to “busyness.” I was never that busy. I never worked past 5 pm or on Saturdays. So I was always out of my office, kind of wandering around the stores. And when you are wandering, you do the kind of work you should do — thinking about scenarios, planning ahead. A leader shouldn’t fall in love with the organization as it is. So I had my scenarios already worked out about what we would do if we had an adverse decision. That’s what a leader should be doing.

When I thought about the college stores, I realized I was always broke in summer. I was tired of it. The commercial stores were always busy. They didn’t have those peaks and valleys. It made good sense to go the commercial route.

GBR: One final question. How did you get into this line of business? What made you think of it?

Orfalea: It was an easy business. How did I get the idea? I used to have a roadside vegetable stand and my inventory would always rot. My dad made women’s clothing, and he had all this inventory to worry about. So I thought, this inventory thing is bad news. I don’t want anything to do with it. With a Xerox machine, I can dial a button and what comes out the end I can sell. It’s actually a simple, dumb business really.

GBR: Not everyone would agree with that last statement, but thank you for helping us understand it from someone who was “there at the creation.”

[1] Basic Books, Inc., Harper & Row Publishers, Inc., John Wiley & Sons, Inc., McGraw-Hill, Inc., Penguin Books USA, Inc., Prentice-Hall, Inc., Richard D. Irwin, Inc., and William Morrow & Co., Inc. (Plaintiffs) v. Kinko’s Graphics Corporation (Defendant) No. 89, CIV.2807 (CBM), US District Court for the Southern District of New York, 758 F. Supp. 1522 ; 1991

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Authors of the article
David M. Smith, PhD
David M. Smith, PhD, is associate professor of economics at the Graziadio School of Business and Management at Pepperdine University. His economic expertise includes the areas of labor pay and productivity, forecasting, and analysis of specific labor markets. A labor economist with an applied focus, Dr. Smith has published numerous articles that have appeared in both academic and practitioner journals. In addition, he has a chapter in an edited volume, a monograph, and published book reviews to his credit. His research on credit unions research has been used in arguments before the US Supreme Court as well as in state legislative hearings. Dr. Smith closely follows current economic trends and has appeared on radio and television and in several newspapers and magazines, including most recently the London Times, the Los Angeles Times, USA Today, the New York Times, and the Investor’s Business Daily.
Frieda Gehlen, PhD
Frieda Gehlen, PhD
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